TORONTO—Canada’s GDP will continue to expand this year, thanks to growth in U.S.-bound exports, according to RBC Economics.
RBC forecasts a 3.2 per cent increase for Canada’s economy this year and a 3.1 per cent rise in 2012.
Much of that growth will be the result of increased demand for Canadian products in the U.S., where the economy will expand 3.4 per cent this year and 3.6 per cent the following year.
“We expect net exports to continue to bolster economic growth in 2011 and 2012, as long as demand for motor vehicles and commodity-related products remains robust,” said Craig Wright, senior vice-president and chief economist at RBC.
The report predicts U.S. motor vehicle sales will rise by nearly 15 per cent to 13.2 million units this year.
Wright also said rising commodity prices will keep the Canadian dollar high, helping businesses import capital equipment to improve productivity.
Meanwhile, labour market conditions will remain stable throughout the year, leading to gains in consumer spending.
The report expects Saskatchewan will lead the provinces in GDP growth this year with a 4.9 per cent increase on surges in utilities, mining and oil.
Increased oil sands activity will also boost GDP by 4.3 per cent in Alberta, which could see its best year since 2006, the report said.
Ontario is expected to see its best performance since 2002, with a 3.1 per cent increase this year.
“The Ontario economy has picked up its game lately. Generally, conditions are expected to continue to improve this year, enabling the province to complete its recovery and start to expand again,” Wright said.
GDP in Quebec is forecasted to grow by a moderate 2.7 per cent, with increases in the mining, utilities and primary metal industries.